{"id":1189,"date":"2016-04-19T18:23:21","date_gmt":"2016-04-19T18:23:21","guid":{"rendered":"http:\/\/maximumlending.com\/new\/?page_id=1189"},"modified":"2022-02-13T01:57:15","modified_gmt":"2022-02-13T01:57:15","slug":"adjustable-rate-mortgages","status":"publish","type":"page","link":"https:\/\/maximumlending.com\/adjustable-rate-mortgages\/","title":{"rendered":"Adjustable Rate Mortgages"},"content":{"rendered":"\t\t
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Adjustable Rate Mortgages<\/h1>\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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An adjustable-rate mortgage, or ARM as it is currently referred to, is a type of mortgage with an interest rate that changes (\u201cadjusts\u201d) periodically in relation to pre-determined intervals. Normally, the initial interest rate is fixed for a specified period of time, after which time it adjusts up or down according to current market conditions.<\/p>

Typically, ARMs are expressed as two numbers, for example 5\/1. In our example, the loan\u2019s rate will not change during the first five years. After those 5 years are up, it will adjust annually as evidenced by the 1. If you plan on staying in your home for only a short while, an ARM could prove to be quite beneficial.<\/p>

Why Choose an Adjustable-Rate Mortgage?<\/h3>\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t
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Many financially savvy people choose an adjustable-rate mortgage for the low interest rates and initial fixed-rate period. This affords homeowners the opportunity to pay more towards the loan\u2019s principal without penalty allowing them to pay off their loan in less time. With an adjustable-rate mortgage, homeowners can enjoy benefits such as:<\/p>\n

Low Interest Rates:<\/strong> The interest rates for adjustable-rate mortgages are currently the lowest they\u2019ve ever been. In fact, the rate for an ARM is often much lower than more traditional loans, such as the 30-year fixed-rate mortgage.<\/p>\n

Short Term Plans:<\/strong> Many times home buyers choose an adjustable-rate mortgage with a fixed term of three, five, seven, or even ten years because they know they are only going to stay in that particular area or home for a short amount of time.<\/p>\n

Qualify for More House:<\/strong> An ARM may allow you to qualify for a higher loan amount and therefore a costlier home. Many home buyers choose to start with an adjustable-rate mortgage and then refinance to a fixed-rate mortgage.<\/p>\n

ARMs Don\u2019t Always Adjust Up:<\/strong> Most people assume that after the initial fixed term expires, their rate will rise, but this is not always the case. Adjustable-rate mortgages can adjust down as well as up dependent on current market conditions.<\/p>\n

What Kind of ARMs Are Available?<\/h3>\n

Here are just some of the terms you may find when choosing an adjustable-rate mortgage for your purchasing or refinancing needs.<\/p>\n

3\/1 ARM:<\/strong> Fixed interest rate for the first three years, adjusts annually for the remaining life of the loan (27 years on a 30-year loan).<\/p>\n

5\/1 ARM:<\/strong> Fixed interest rate for the first five years, adjusts annually for the remaining term of the loan (25 years on a 30-year loan).<\/p>\n

7\/1 ARM:<\/strong> Fixed interest rate for the first seven years, adjusts annually for the remaining term of the loan (23 years on a 30-year loan).<\/p>\n

10\/1 ARM:<\/strong> Fixed interest rate for the first ten years, adjusts annually for remaining term of the loan (20 years on a 30-year loan).<\/p>\n

If an adjustable-rate mortgage sounds like the right fit for you, contact Maximum Lending at (949) 342-0610, or eldon@maximumlending.com<\/a> to speak with one of our expert loan officers.<\/p>\n

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